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Questions and Answers
Which statement is true regarding fair presentation in financial statements?
What is the purpose of an explicit and unreserved statement of compliance in the notes of financial statements?
Which accounting standard sets out a hierarchy of authoritative guidance for selecting and applying accounting policies?
Which basis of accounting should an entity use when preparing its financial statements, except for cash flow information?
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When should an entity disclose uncertainties related to events or conditions that may cast significant doubt upon its ability to continue as a going concern?
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Under what circumstances should an entity aggregate material items that have different natures or functions in its financial statements?
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When can an entity offset assets and liabilities, or income and expenses, in its financial statements?
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Which statement is true about the presentation of financial statements?
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In which circumstance is an entity required to present an additional statement of financial position?
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What must an entity disclose when it changes the presentation or classification of items in its financial statements?
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When should an entity retain the presentation and classification of items in the financial statements from one period to the next?
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Which statement is true about revenue recognition under IFRS 15?
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How should an entity present gains and losses on the disposal of non-current assets?
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When should an entity present gains and losses arising from a group of similar transactions on a net basis?
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What is the minimum comparative information an entity should present in its financial statements?
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Which of the following statements is true regarding an entity's ability to rectify inappropriate accounting policies?
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When can an entity depart from a requirement of an IFRS?
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What disclosures must be made when an entity departs from a requirement of an IFRS?
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In what circumstances should an entity reduce the perceived misleading aspects of compliance with a requirement in an IFRS?
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Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Conceptual Framework for Financial Reporting.
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An entity is required to provide additional disclosures when compliance with the specific requirements in IFRSs is sufficient to enable users to understand the impact of particular transactions, other events, and conditions on the entity's financial position and financial performance.
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An entity whose financial statements comply with IFRSs is not required to make an explicit and unreserved statement of such compliance in the notes.
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True or false: When an entity does not prepare financial statements on a going concern basis, it is not required to disclose that fact
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True or false: An entity shall present separately each material class of similar items in its financial statements
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True or false: Measuring assets net of valuation allowances is an example of offsetting
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True or false: An entity should aggregate material items that have different natures or functions in its financial statements
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True or false: IFRS 15 requires an entity to measure revenue from contracts with customers at the amount of consideration to which the entity expects to be entitled?
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True or false: An entity may net income with related expenses arising from transactions that do not generate revenue but are incidental to the main revenue-generating activities?
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True or false: An entity presents gains and losses on the disposal of non-current assets by deducting from the amount of consideration on disposal the carrying amount of the asset and related selling expenses?
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True or false: An entity is required to present a complete set of financial statements at least once every three years?
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True or false: An entity can rectify inappropriate accounting policies by disclosing the accounting policies used or by notes or explanatory material.
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True or false: In extremely rare circumstances, an entity can depart from a requirement in an IFRS if compliance with that requirement would conflict with the objective of financial statements set out in the Conceptual Framework.
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True or false: When an entity departs from a requirement of an IFRS, it does not need to disclose the financial effect of the departure on each item in the financial statements.
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True or false: An entity is required to disclose adjustments to each item in the financial statements if it has departed from a requirement of an IFRS in a prior period and that departure affects the amounts recognised in the current period's financial statements.
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True or false: An entity is required to present three statements of financial position if it applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements.
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True or false: An entity is required to present an additional statement of financial position in the notes to the financial statements if it applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements.
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True or false: When an entity is required to present an additional statement of financial position, it must also present the related notes to the opening statement of financial position as at the beginning of the preceding period.
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True or false: If an entity changes the presentation or classification of items in its financial statements, it is required to reclassify comparative amounts unless reclassification is impracticable.
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Study Notes
Fair Presentation in Financial Statements
- Fair presentation requires a faithful representation of the effects of transactions, other events, and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income, and expenses set out in the Conceptual Framework for Financial Reporting.
- An entity must provide additional disclosures when compliance with the specific requirements in IFRSs is sufficient to enable users to understand the impact of particular transactions, other events, and conditions on the entity's financial position and financial performance.
Compliance with IFRS
- An entity is required to make an explicit and unreserved statement of compliance with IFRS in the notes to the financial statements.
- An entity whose financial statements comply with IFRSs is required to make such a statement.
Going Concern
- When an entity does not prepare financial statements on a going concern basis, it is required to disclose that fact.
- An entity must disclose uncertainties related to events or conditions that may cast significant doubt upon its ability to continue as a going concern.
Presentation of Financial Statements
- An entity shall present separately each material class of similar items in its financial statements.
- An entity cannot aggregate material items that have different natures or functions in its financial statements.
- Measuring assets net of valuation allowances is not an example of offsetting.
Revenue Recognition
- IFRS 15 requires an entity to measure revenue from contracts with customers at the amount of consideration to which the entity expects to be entitled.
- An entity cannot net income with related expenses arising from transactions that do not generate revenue but are incidental to the main revenue-generating activities.
Disposal of Non-Current Assets
- An entity presents gains and losses on the disposal of non-current assets by deducting from the amount of consideration on disposal the carrying amount of the asset and related selling expenses.
Comparative Information
- An entity must present a complete set of financial statements at least once every year.
- The minimum comparative information an entity should present in its financial statements is one year.
Changes in Accounting Policies
- An entity cannot rectify inappropriate accounting policies by disclosing the accounting policies used or by notes or explanatory material.
- In extremely rare circumstances, an entity can depart from a requirement in an IFRS if compliance with that requirement would conflict with the objective of financial statements set out in the Conceptual Framework.
Departure from IFRS Requirements
- When an entity departs from a requirement of an IFRS, it must disclose the financial effect of the departure on each item in the financial statements.
- An entity must disclose adjustments to each item in the financial statements if it has departed from a requirement of an IFRS in a prior period and that departure affects the amounts recognised in the current period's financial statements.
Additional Statement of Financial Position
- An entity is required to present an additional statement of financial position if it applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements.
- When an entity is required to present an additional statement of financial position, it must also present the related notes to the opening statement of financial position as at the beginning of the preceding period.
- If an entity changes the presentation or classification of items in its financial statements, it is required to reclassify comparative amounts unless reclassification is impracticable.
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Description
This quiz tests your knowledge of disclosure requirements when an entity faces uncertainties that may impact its ability to continue as a going concern. Learn about the key considerations and disclosure requirements in financial statements.
